Dive Brief:

• Fat Brands plans to add 900 units over the next five years, the company confirmed in an email to Restaurant Dive.
• This pipeline of restaurant commitments, which are signed and paid for, represents an additional 38% unit growth that will provide around $50 million in incremental adjusted EBITDA, CEO Andy Wiederhorn said during the company’s second quarter earnings call on July 28. 
• The company, which has 2,350 units open as of July 31, would grow to 3,250 units, over the next five years, with these new restaurants. 

Dive Insight:

The company’s aggressive acquisitions strategy, which led to the addition of Fazoli’s, Twin Peaks, Native Grill & Wings, and five QSR brands within Global Franchise Group, has created opportunities for organic growth, especially among franchisees. 

“As we integrate the eight new restaurant concepts that we acquired in 2021 within the Fat Brands portfolio, we are seeing robust demand from our existing and new franchise partners to add a variety of our brands to their portfolio of restaurants,” Wiederhorn said. “In fact, we have over 325 multiunit franchisees at the end of Q2.”

During the second quarter, Fat Brands opened 26 restaurants, bringing its year-to-date total to 60 units, with plans to reach 110 to 120 new units by year’s end, Wiederhorn said. The company plans to increase its development pipeline by providing incentives to franchisees to buy additional restaurants, he said. 

The company already has 50 to 60 units under construction that are expected to open in 2023, according to Wiederhorn. 

Much of the overall pipeline is coming from its fast casual, QSR and polished casual brands, Wiederhorn said. Twin Peaks, for example, has 130-plus stores in its pipeline, with plans for about 10 to 20 opening each year. That brand, which had 82 units with another 24 under development at acquisition last year, is expected to reach 100 stores by the end of 2022. 

Fat has dozens of deals on a domestic and international scale associated with its burger brands like Fatburger and Johnny Rockets. Its casual brands, like Hurricane Grill and Wings, Buffalo’s Cafe, Native Grill & Wings and Ponderosa and Bonanza Steakhouses are opening at a much slower rate than the company’s other concepts.

Co-branding is also becoming popular across brands, especially co-branding Fatburger with Buffalo’s Express, and Marble Slab Creamery with Great American Cookies. The company expects in the near future to have co-branded Round Table Pizzas with Fatburger, and Johnny Rockets with Hot Dog on a Stick, Wiederhorn said, adding that co-branding can help drive additional revenue growth. 

With 17 brands under its control, Fat Brands may slow down its pace of acquisitions. This year, the company is primarily focused on integrating its latest additions, but will continue to consider potential strategic acquisitions that fit within its portfolio. Earlier this year, for example, it bought Nestlé Toll House Cafe by Chip, and will convert these 85 stores into the Great American Cookies brand. The first of these converted stores is expected to open in September, Wiederhorn said.